stockrowWhat it does
Norfolk Southern owns and operates a freight railroad. It transports raw materials, intermediate products and finished goods for businesses, primarily across the Southeast, East and Midwest. Connections with other rail carriers extend its service to and from the rest of the United States, while ports connect its network with overseas trade.
The company carries freight in three broad groups: merchandise, intermodal and coal. Merchandise covers goods ranging from grain and chemicals to construction materials and vehicles. Intermodal freight travels in containers or trailers that can move between trains and other forms of transport. Coal moves to electricity generators, industrial customers and export markets.
Rail customers use Norfolk Southern to connect facilities such as factories, mines, power plants and distribution centers. Its intermodal customers also include businesses that arrange shipping for others and international steamship lines. The railroad provides the track, terminals, locomotives and other equipment needed to move freight across its network, using a combination of owned and leased assets and operating rights over some lines.
At December 31, 2025, Norfolk Southern operated approximately 19,100 route miles in 22 states and the District of Columbia. It is based in Atlanta. Mark George is its president and chief executive officer.
How it makes money
Norfolk Southern earns railway operating revenue by moving freight. Its merchandise business carries agricultural and consumer products, chemicals, metals and construction materials, and automotive goods. In 2025, the company handled 2.3 million merchandise carloads. Merchandise revenue was $7.7 billion, or 63.1% of railway operating revenue.
Intermodal shipments move in domestic and international containers and trailers. Norfolk Southern handles them for intermodal marketing companies, steamship lines, premium customers and companies that own transportation assets. It handled 4.1 million intermodal units in 2025. Coal serves electricity generation, export, domestic metallurgical and industrial markets; the company handled 78.0 million tons in 2025.
Total railway operating revenue was $12.2 billion in 2025. In Q3 2026, the adjusted operating ratio was 65.4%; that ratio measures operating expenses as a percentage of revenue.
The railroad generally prices services through private contracts and exempt price quotes. Market forces are the primary determinant of its rail service prices, and approximately 90% of revenue comes from exempt shipments or shipments moving under transportation contracts. Approximately 95% of its revenue base is covered by contracts that include negotiated fuel surcharges. Those surcharges change with fuel commodity prices: fuel surcharge revenue was $828 million in 2025.
Revenue changes with shipment volumes, pricing, the mix of freight and fuel surcharges. In 2025, merchandise revenue rose as higher volume and favorable pricing and mix more than offset lower fuel surcharge revenue. Intermodal revenue declined as volumes fell, including some customer distribution-network diversification connected with the proposed merger.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Merchandise | $7.7 billion | 63.1% | 2.86% |
| Intermodal | $3.0 billion | 24.7% | −1.08% |
| Coal | $1.5 billion | 12.2% | −7.70% |
Customers and how it sells
Norfolk Southern serves businesses whose goods move between production sites, distribution centers, ports and end markets. Its network reaches manufacturing plants, electric generating facilities, mines, distribution centers and transload facilities, where freight can transfer between transportation modes. Merchandise customers ship products including food ingredients, chemicals, metals, vehicles and automotive parts.
Intermodal customers include marketing companies, international steamship lines, premium customers and asset-owning companies. These shipments use containers and trailers rather than conventional railroad freight cars alone. Coal customers include power generators and businesses in the export, metallurgical and industrial markets.
The railroad operates primarily in the eastern United States. Its connections with other railroads extend its reach to and from the rest of the country. Its network connects to ports on the Atlantic and Gulf coasts and the Great Lakes. Major freight corridors include the New York City area to Chicago, Chicago to Macon, and central Ohio to Norfolk.
It was reported on 2 November 2026 that Norfolk Southern would become Schneider National’s primary East Coast rail provider through a partnership intended to expand domestic intermodal capacity. No customer revenue concentration is specified for that relationship.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Merchandise | $7.7 billion | 63.1% | 2.86% |
| Intermodal | $3.0 billion | 24.7% | −1.08% |
| Coal | $1.5 billion | 12.2% | −7.70% |
Suppliers and costs
Norfolk Southern operates a capital-intensive railroad rather than a manufacturing business. Its costs include employee compensation and benefits, fuel, materials, purchased services and equipment rents. It uses owned and leased locomotives and freight cars, as well as maintenance machinery and other equipment. The company is responsible for maintaining 28,200 miles of the track on which it operates; other parties maintain track used under certain trackage rights.
In 2025, property additions included road and other property and equipment. The company subsequently increased its expected 2026 capital expenditure to roughly $2.1 billion, including investment intended to accommodate growth and improve the network.
Norfolk Southern had 19,300 employees at the end of 2025. Approximately 80% of its railroad employees were covered by collective bargaining agreements. Higher fuel prices contributed to both revenue and expense increases in Q3 2026, and the company identified inflation and higher volume-related costs in compensation, purchased services and materials. It also expects health and welfare benefits and insurance costs to remain cost pressures.
- Revenue$12.2B
- Cost of revenue−$3.7B
- Selling, general and administrative−$2.9B
- Other operating costs−$1.2B
- Operating income$4.4B
Competitive position
CSX Corporation is Norfolk Southern’s primary rail competitor, and the two operate across much of the same territory. Norfolk Southern also competes with other railroads, trucking and water carriers. Shippers can sometimes transport their own goods, source products from different areas or use substitute products.
Price is one consideration in a customer’s choice of transport. Reliability, inventory carrying costs, ease of handling and the risk of loss or damage also affect the decision. Norfolk Southern says the competitive environment has intensified since its merger announcement, with competitors offering new products and working together.
Our reading: Norfolk Southern’s track network and connections to plants, ports and other railroads provide a meaningful competitive position in the markets it reaches. Its infrastructure requires substantial capital and maintenance, while CSX operates across much of the same territory.
Our reading: Intermodal terminals and connections help the company offer customers an alternative to trucks, but that position is constrained by service requirements and competition from highway carriers. Norfolk Southern expects some recent freight gains from trucks to return to highways unless the rail industry makes structural changes.
The company’s predominant pricing mechanisms are private contracts and exempt price quotes, and market forces generally determine rail service prices. The Surface Transportation Board retains jurisdiction over some rates, routes, customer access and other conditions of service.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| CSX Corporation | Rail freight across overlapping eastern U.S. territory | High |
Growth opportunities
Norfolk Southern is pursuing freight that currently moves by highway, particularly through its intermodal network. The company says a tighter trucking market helped rail compete during Q3 2026 and that highway-to-rail conversion drove a substantial part of its intermodal growth. It also views many of the macroeconomic factors behind recent conversions as temporary.
The company is investing in terminals and network capacity to handle demand. It raised its expected 2026 capital expenditure to roughly $2.1 billion, with the increase intended to capture growth opportunities and improve network resilience and efficiency. It is also recruiting and training train-and-engine employees to support growth.
Industrial development is another source of potential traffic. In Q3 2026, Norfolk Southern said it had over 50 industrial projects in design and construction, a stage it associates with projects likely to be executed. New or expanded customer facilities can create demand for freight service when they begin operating.
The proposed Union Pacific acquisition is intended to combine the companies’ rail networks. Norfolk Southern says the combination could support freight conversion from highways by providing a different service across the combined network. Completion remains subject to conditions including Surface Transportation Board approval. Separately, it was reported on 2 November 2026 that Norfolk Southern was expanding terminals in Ohio, Michigan, North Carolina and Illinois.
- $11.1BFY2021
- $12.7BFY2022
- $12.2BFY2023
- $12.1BFY2024
- $12.2BFY2025
Structural risks
- Merger completion and disruption: The proposed Union Pacific acquisition requires regulatory approval. If it does not close, Norfolk Southern could face customer, supplier, employee or other business-partner reactions, transaction costs and, in specified circumstances, a substantial termination fee.
- Accidents and environmental exposure: A train derailment in East Palestine, Ohio, involved hazardous materials, fires and a controlled vent and burn. The company continues to address environmental and legal matters related to the incident.
- Network and technology disruption: A significant adverse event on the network could impede operations and customer service. A cybersecurity incident or other technology disruption could also interrupt the business.
- Crew availability: Norfolk Southern says train-and-engine jobs are difficult to fill and that substantial attrition occurs during training. Unexpected volume increases can strain crew capacity and affect service.
- Demand and competitive pressure: General economic conditions can affect freight demand. Norfolk Southern expects some recent highway-to-rail gains to return to trucks if conditions change without structural changes in rail service; low natural-gas prices also compete with domestic coal demand.
- Regulation and costs: Government action on commercial, safety, security, cybersecurity or other matters could affect the company or its markets. Fuel volatility, employee benefits and insurance costs can also affect expenses.
Bottom line
Our reading
Norfolk Southern is a capital-intensive freight railroad whose business rests on moving diverse goods over an eastern U.S. network and connecting them to other carriers and ports. Its network supports recurring shipping relationships, but customers can also choose competing railroads, trucks and other alternatives. Growth opportunities in intermodal and industrial traffic come alongside exposure to fuel costs, crew capacity, service reliability and the outcome of the proposed Union Pacific acquisition.